Patent Eligibility of Computer-Implemented Inventions Further Delineated by U.S. Court

In the recent decision of Bancorp Services L.L.C. v Sun Life Assurance Company of Canada (U.S.), Fed. Cir., No. 2011-1467, 7/26/12, the United States Court of Appeals for the Federal Circuit further delineated the requirements for the patentability of computer-implemented inventions in the United States.

The Federal Circuit held that machine, system or computer-readable medium patent claims may be found equivalent to an abstract mental process for the determination of patentable subject matter. In the Bancorp decision, it found a system claim which included a limitation of a computer to perform the steps of a method was a claim to an abstract idea because the computer functioned solely as an obvious mechanism for permitting a solution to be achieved more quickly.

In Bancorp, the patents at issue were directed to systems and methods for administering and tracking the value of life insurance policies in separate accounts. Independent method claim 9 of one of the patents read: a method for managing a life insurance policy on behalf of a policy holder, the method comprising the steps of: generating a life insurance policy including a stable value protected investment with an initial value based on a value of underlying securities; calculating fee units for members of a management group which manage the life insurance policy; calculating surrender value protected investment credits for the life insurance policy; determining an investment value and a value of the underlying securities for the current day; calculating a policy value and a policy unit value for the current day; storing the policy unit value for the current day; and one of the steps of: removing the fee units for members of the management group which manage the life insurance policy, and accumulating fee units on behalf of the management group. Claim 17 of that patent depended from independent method claim 9 and required that the method's steps be "performed by a computer". Claim 18 of that patent recited "a computer readable medi[um] for controlling a computer to perform the steps of" and then repeated the steps of independent method claim 9. The other patent included system claims which tracked the content of the method and medium claims.

Sun Life argued that even if the method claim required a computer, as in claim 17, the claim was unpatentable because the routine use of a computer to perform calculations cannot turn an otherwise ineligible mathematical formula or law of nature into patentable subject matter. Moreover, Sun Life argued that the system and medium claims merely paraphrase the unpatentable method claims, and as a result they are not patent eligible for the same reasons as the method claims.

The Federal Circuit relied on its recent decisions in CyberSource v Retail Decisions, 654 F.3d 1366, 1374 (Fed. Cir. 2011) and CLS Bank International v Alice Corp., No. 2011-1301, 2012 WL 27084900 at *10 (Fed. Cir. July 9, 2012) for the principle that a machine, system, medium, or the like may in some cases be equivalent to an abstract mental process for the purposes of patent ineligibility.

With respect to the claims at issue, the Federal Circuit concluded that there was no material difference between the method, medium and system claims—the only difference between the claims was the form in which they were drafted. The Federal Circuit then concluded that the claims cover no more than abstract ideas and therefore do not recite patent-eligible subject matter. The Federal Circuit held that the limitation "using a computer" in an otherwise abstract concept did not play a significant part in permitting the claimed method to be performed. As the computer required by some of Bancorp's claims was employed only for its most basic function, the performance of repetitive calculations, the Federal Circuit found it did not impose meaningful limits on the scope of those claims. The Federal Circuit remarked that to salvage an otherwise patent-ineligible process, a computer must be integral to the claimed invention, facilitating the process in a way that a person making calculations or computations could not. Simply adding a computer-aided limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible.

In reaching its conclusion, the Federal Circuit distinguished Research Corp. Techs. v Microsoft, 627 F.3d 859 (Fed. Cir. 2010), which was relied on by Bancorp in arguing for patent eligibility. In Research Corp., the patents claimed processes for enabling a computer to render a halftone image of a digital image by comparing, pixel by pixel, the digital image against a two-dimensional array called a mask.

The Federal Circuit found two critical differences between Research Corp. and the case at hand. First, the claimed processes in Research Corp. plainly represented improvements to computer technologies in the marketplace: as compared to the prior art, the mask produced higher quality halftone images while using less processor power and memory space. No such technological advance was evident in the Bancorp claims: the claims merely employed computers to track, reconcile, and administer a life insurance policy with a stable value component. Second, the method in Research Corp. required the manipulation of computer data structures (the pixels of a digital image and the mask) and the output of a modified computer data structure (the halftoned image) was dependent upon the computer components required to perform it. In other words, the Research Corp. method could not be performed entirely in a human's mind. Whereas, in contrast, the computer in the Bancorp method merely permitted one to manage a stable value protected life insurance policy more efficiently than one could mentally.

The Federal Circuit also commented that the decision in the case at hand was not inconsistent with the CLS decision which held that method, system and medium claims directed to a specific application of exchanging obligations between parties using a computer were patent eligible. In CLS, to be patent eligible, the computer limitations had to play a significant part in the performance of the claimed invention or be directed to a very specific application of the inventive concept. The Court remarked that, unlike in CLS, the claims sought by Bancorp were not directed to a "very specific application" of the inventive concept but instead broadly claimed the unpatentable abstract concept of managing a stable value protected life insurance policy.

Accordingly, when applying for patents for computer-implemented inventions in the United States, applicants ought to give due consideration to whether computer limitations play a significant part in the performance of the claimed invention, facilitating the process in a way that a person making calculations or computations could not. If that is not the case, applicants ought to consider limiting their claims to a "very specific application" of the inventive concept in order to maintain patent eligibility.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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